Why Shares of ZIM Integrated Shipping Services Are Falling Again Today

What happened

After the company disappointed investors with a weaker-than-expected first-quarter 2023 earnings report and offered an inauspicious outlook on 2023, the stock price of ZIM Integrated Shipping Services (NYSE:ZIM) plunged more than 16% yesterday.

And it doesn't look as if the sell-off will be ending today. Investors continue to click the sell button in response to yesterday's announcement, and analysts' bearish takes on the international cargo shipping stock are providing additional catalysts for the decline.

As of 10:05 a.m. ET, shares of ZIM have dropped 7.2%, paring back their earlier decline of 11.8%.

So what

Main Street investors are finding today that the disapproval they expressed yesterday is being validated by those on Wall Street.

• Alexia Dogani, an analyst at Barclays, cut the price target on ZIM's stock to $13 to $15, keeping an underweight rating.
• Similarly, Omar Nokta, an analyst at Jefferies, lowered his price target to $16 from $20 and maintained a hold rating on ZIM's shares.

Based on yesterday's closing price, the price targets of Dogani and Nokta represent downside of 11.4% and upside of 9%, respectively.

Reporting steep year-over-year revenue and earnings decreases, ZIM provided investors with little to celebrate yesterday. Additionally, management projects a sharp decline in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

Income investors are likely leading the charge to the exits. While the company returned $27.55 per share to investors in 2022 and paid a $6.40-per-share dividend in April, management said it is not paying a quarterly dividend based on the company's Q1 2023 results.

Now what

While it's worth noting analysts' opinions on stocks, it's critical to remember that their price targets are often predicated on shorter investing horizons than the multiyear holding periods we favor here at The Motley Fool. Nonetheless, the company's financial results certainly warrant caution.

With regard to the dividend, it's possible that the company will return to making a quarterly payment, though it seems highly unlikely that it will be as robust as in 2022. So income investors will want to consider other opportunities.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group. The Motley Fool recommends Barclays Plc and Zim Integrated Shipping Services. The Motley Fool has a disclosure policy.